aprilhenry (aprilhenry) wrote,
aprilhenry
aprilhenry

One little secret about publishing: reserve against returns

When I published my first book, Circles of Confusion, back in 1999, I heard from the telesales rep that there were no more copies of it in the warehouse and it was being reprinted. She told me even before my editor did. It was so exciting! I quickly started adding up how much money I would make. Since I got 10% of every hardcover, and each hardcover cost $24, and they had printed 7,500, that equaled $18,000. Which was more than my advance. So I would soon be getting a check, right?

Right?

Wrong.

First of all, publishers only have two accounting periods. Let's say April and October. But they pay you for those accounting periods well after that particular six-month period ends. For example, they might pay you for the books that sold in the six months from October to April in July. Maybe. Or August.

And just because those 7,500 books were shipped, it doesn't mean they were sold. In a system leftover from the Great Depression, when bookstores were reluctant to take on inventory they might not be able to sell, they order titles with a right to return unsold merchandise. (With paperbacks, the only part they return is the front cover. The rest is destroyed.) The last time I looked it up, only 70% of hardcover books printed actually sold, and just 50% of paperbacks. I doubt the percentages have changed much.

Knowing this, publishers have a "reserve against returns" clause that allows them to not count a percentage of your sales for a long time. They use this as a buffer against the inevitable returns. The publisher's reserve against returns in your royalty statement can run from a low of ten percent to a high of fifty or percent. The longer the book has been out, the smaller the reserve.
In order to make money past your advance, you have to have a high sell-through (the percentage of books your publisher ships minus the percentage the bookstores return) and you have to have pretty good-sized print runs.

Have I gotten royalty checks since then? Yes. But I've learned not to try to do the math in advance, and never, ever to count on the money. Because you can't. Much better not to expect anything and to be pleasantly surprised.



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